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The Building Owners and Mangers Association of Chicago signed a memorandum of understanding today with the Korean Smart Grid Association and two Korean energy and technology companies, KT Corporation and LG Electronics, to develop a commercial smart grid pilot program for office buildings in downtown Chicago.

R-L David Kolata, executive director, Citizens Utility Board; Matthew Summy, Illinois Science and Technology Coalition: Maureen Ehrenberg, president, BOMA/Chicago

The project will be the first of its kind anywhere and BOMA/Chicago officials will attempt to demonstrate that this system can be a benefit to the economy and the environment through energy savings, new revenue streams, and carbon reduction.

The pilot program will be made possible by a $20-$30 million investment from the Korean entities.

The smart grid pilot program is a part of a larger umbrella effort between BOMA/Chicago, the Korean Smart Grid Association, the Illinois Science and Technology Coalition and the Citizens Utility Board to promote smart grid projects for commercial and residential programs. BOMA/Chicago will manage the commercial real estate component of the pilot program and CUB will oversee the residential pilot.

BOMA/Chicago has been attempting to develop a smart grid program for more than two years. Last year, the association applied for a grant through the U.S. Department of Energy that would include matching stimulus funds. BOMA/Chicago did not receive the grant or the stimulus funds, but it did not want to give up on the project.

Michael Cornicelli, executive vice president of BOMA/Chicago, says that the firm had a very structured plan that was ready for development, but it still needed financial backers.

Not long after the association lost out on the grant from the DOE, it was approached by the Korean contingent that would eventually move the process forward.

The Korean companies see this agreement as an inroad to the U.S. technology market and program that they can use to showcase their capabilities and product offerings.

The program will provide opportunities for buildings to cut down on energy usage and cost through the implementation of smart meters. The information provided by the meters is essentially real-time and building operators can find out how much power they are using, exactly when and where. Building managers can take this information and then decide how to better regulate their usage.

Timing is important for electricity prices. Prices can vary as much as 1600 percent between off-hours–morning and nights–to peak usage during business hours. On a hot, humid day in August or July, peak demand may drive up energy cost considerably. Buildings on the smart metering system will be able to recognize when peak demand hours are in effect and dial back usage if they choose.

The pilot program will be spread across as many as 14 buildings or as few as four, says BOMA’s Cornicelli.

“We will determine which buildings this program will work best for,” says Cornicelli. “The Koreans want a nice range of buildings, from large-to-medium sized, so they can display more of their products. They will be building names that you recognize.”

Cornicelli says that the long-term goal is to expand the program to include all of BOMA’s 260 buildings in the downtown area.

“We estimate that our buildings use 1,000 megawatts at peak demand,” says Cornicelli. “We could curtail that demand by 20 percent if they were on this system. That is 200 megawatts of power, which is equivalent to a mid-sized coal plant.”

The program will also create the opportunity for a new revenue stream through a demand response system.

The buildings involved will work with a network operating center (NOC), which interprets wholesale electricity market signals from PJM Interconnection, the grid operator.

PJM can send requests for buildings on the smart grid program to cut back on usage at certain times to free up more energy for the grid. If New York City is experience a high surge in use, the operator can ask users in Chicago to cut back for period of time if it is possible. These saving efforts can be viewed as a revenue generator as the buildings will be able to see monetary benefits through their participation.

Buildings may not be able to participate in every request, but many may see it as an opportunity to increase revenue.

“Our buildings will be known as virtual power plants,” says David Kolata, executive director of CUB.  “They are not actually generating electricity, but through better performance and function they can generate new revenue.”

Once buildings are selected, retrofitting and system programming will commence, with the goal of the pilot program coming on line in the summer of 2011.

Tags | BOMA, Chicago, Office

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